Some obligations sit outside the balance sheet: contracts the company has signed but not yet performed, and security it has given over its assets. This note covers the ones that do not have a note of their own.
What this note shows
SI 2008/409 Schedule 1 requires small companies to disclose the total amount of any financial commitments, guarantees and contingencies that are not included in the balance sheet, with an indication of the nature and form of any security given. Tax Optimiser has separate notes for the most common kinds:
- Capital commitments — contracted spending on fixed assets.
- Operating lease commitments — future lease payments.
- Pension commitments.
- Contingent liabilities — possible obligations that depend on a future event.
Use this note for anything else, for example long-term purchase contracts, or to describe security over the company's assets. A bank's fixed and floating charge over the assets is a common example; it can go here or alongside the bank loan in the creditors notes.
If the company has no other commitments, leave the note off or use the nil template. In FRS 105 micro-entity accounts, commitments are disclosed in a single note — see Guarantees and other financial commitments (FRS 105).
Where the information comes from
This is a text note; nothing is taken from the trial balance. Look at signed contracts, loan and facility agreements, and the charges registered against the company at Companies House.
Completing the note in Tax Optimiser
- Open the period, choose View Accounts, then Notes.
- Select Other financial commitments and set Show this note in the accounts to Yes.
- Click Use Template and choose the wording, or type your own. To cover both a charge and other commitments, apply one template and type the other sentence below.
- Click Save changes.
Wording templates
- Charge over assets — bank borrowings secured by a fixed and floating charge over the company's assets. No placeholders.
- Other commitments — the total of other financial commitments not provided for. The period end date is filled in automatically; asks for {{CommitmentAmount}}. Add a few words on what the commitments are.
- No other financial commitments — a nil statement at the period end date.
How it appears in the accounts
The note prints as text under the heading “Other financial commitments”.
Frequently asked questions
What counts as an “other financial commitment”?
A binding obligation not recorded on the balance sheet that isn't a capital commitment, operating lease, pension commitment or contingent liability — for example a long-term supply contract.
Where do I disclose a bank's fixed and floating charge?
Either here, using the Charge over assets template, or alongside the secured loan in the creditors notes. Disclosing it once is enough.
Should operating lease commitments go in this note?
No. Use the operating lease commitments note, which shows the amounts by when they fall due.
Do micro-entities disclose other financial commitments?
Yes, in the guarantees and other financial commitments note under the balance sheet in FRS 105 accounts.